AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 428
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....d property books of account. 2. On the facts and circumstances of the case and law the Ld. CIT (A) erred in confirming addition on account of commission on loan where in the statement recorded on oath never mention that assessee earning commission on loan. Without any statement and evidences, addition made on presumption is bad in law. 3. On the facts and circumstances of the case and in law Ld. CIT(A) erred in adding the notional commission on unsecured loan treating the same as accommodation of bogus transaction @ 2.4% i.e. from M/s. Abhayraj Gems Pvt Ltd Rs. 7,09,607/- & M/s. Rishabh Impex Rs. 8,54,659/-in the hands of the assessee. 4. On the facts and circumstances of the case and in law Ld, CIT(A) erred in adding the notional commission on purchases treating the same as accommodation of bogus transaction @ 0.075% i.e. from M/s. Abhayraj Gems Pvt Ltd Rs. 38,546/- & M/s. Rishabh Impex Rs. 5,07,819/- in the hands of the assessee. 5. On the facts and circumstances of the case and in law Ld. CIT(A) erred in adding the notional commission on imports treating the same as imports made on behalf of others @ 0.275% i.e. from M/s. Abhayraj Gems Pvt Ltd Rs. 7,32,454/- M/s. Risha....
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....f diamonds. 3.3 During assessment proceedings, a detailed show-cause notice dated 07/03/2016 was issued to the assessee, the relevant extract of which has already been reproduced in the quantum assessment order at para 2.3. In the stated notice, it was alleged that the assessee was operating and managing not only the above stated entity i.e. M/s Abhayaraj Gems Private Ltd. in which he was a director but also another entity namely Rishabh Impex, the name sake proprietor of which was stated to be an individual namely Shri Bherulal Jain. Similar features were noted in operations / transactions carried out in these two firms. 3.4 During search proceedings, the assessee, in statement on oath u/s 132(4) recorded on 05/10/2013, accepted the aforesaid fact and submitted that he was importing goods on behalf of the real importers and the import consignment was handed over to them after receipt of material against cash. All these transactions were stated to have taken place out of regular books of accounts of the real importers as well as the aforesaid two entities. The bogus stock was, thereafter, used to issue bogus sale bills to various beneficiaries who made payment through banking cha....
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....odation entries. Since the two entities were being managed and controlled by the assessee, the estimated income of these two entities, in the opinion of Ld. AO, was to be clubbed / added in the hands of the assessee. Finally, the commission income was worked out on the basis of audited accounts of these two concerns as per following estimate: - No. Nature of Transactions Estimate Rate of Commission 1. Accommodation of bogus unsecured loans 2.4% 2. Accommodation of bogus purchases 0.075% 3. Accommodation of bogus imports made for real importers 0.275% 4. Estimated Expenses allowed against above estimated commission income 10% The aforesaid working resulted into net addition of Rs. 29.99 Lacs in the hands of the assessee. 4.1 Aggrieved, the assessee agitated the same on same lines with partial success before Ld. first appellate authority vide impugned order dated 01/12/2017. The Ld. CIT(A), after careful consideration of factual matrix, upheld the action of Ld. AO in making additions on estimated basis since the finding of Ld. AO, in the opinion of Ld. CIT(A), was not based merely on statement given u/s 132(4) but also on the basis of overwhelming incrimina....
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.... higher side keeping in view the estimation made by revenue on similar factual matrix in similar other cases. A plea has also been raised that enhancement of income by first appellate authority was without any corroborative material on record and lastly, the allowance of expenditure was still on the lower side and as a natural consequence, credit of income reflected by the two entities in their respective return of income, was to be provided to the assessee. Per Contra, Ld. Departmental Representative [DR] submitted that the estimation made by lower authorities was quite reasonable one and therefore, the same would not warrant any interference. 6.1 We have carefully heard the rival submissions and perused relevant material on record including the documents placed in the paperbook & judicial pronouncements as cited before us. 6.2 The Ld. AR has relied upon the orders of this Tribunal rendered in M/s Morewel Impex Pvt. Ltd. [ITA No. 6992/Mum/2010 & others, order dated 14/10/2015] & Sunshine Import & Exports Pvt. Ltd. [ITA No.4347/Mum/2015 & others, order dated 09/09/2016] to submit that the additions were not warranted in the hands of the assessee since the same were made merely o....
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....) given by the assessee on 05/10/2013, reveal that the assessee was making imports for other entities against commission. The goods were handed over to real importers after receipt thereof. The fictitious stock thus created by the assessee in the books of accounts, was later used to provide accommodation sale bills to other entities against commission. The payment received through banking channels from those suppliers was, in turn, used to advance fictious loans and advances to other entities. The chain of the transactions establishes that the assessee has received commission on three accounts viz. commission on import purchases made on behalf of other entities, commission on accommodation local sales bills provided to other entities and commission on entries of loans and advances being provided to certain beneficiaries. In this factual background, the commission on local purchases stated to be made by the two entities, under the circumstances could not be sustained. Nothing has been brought on record to suggest that the assessee has received commission on account of local purchases stated to be made by the two entities. The same is also not supported by the statement made u/s 132....